Seattle company wins patent for digital lending

Earlier this week a certain Seattle company acquired what may well become a very important piece of the future ebook market: a patent that enables digital “lending.”

Geekwireexplains how the patent will allow the Seattle company to build

… a system for users to sell, trade and loan digital objects including audio files, eBooks, movies, apps, and pretty much anything else.

The patent covers transferring digital goods among users, setting limits on transfers and usage, charging an associated fee, and other elements of a marketplace for “used” digital goods.

The reselling and lending of digital books has become something of a holy grail in recent years, with retailers racing to develop and capitalize on what’s known as the “secondary market for digital products.”

“When the user no longer desires to retain the right to access the now-used digital content, the user may move the used digital content to another user’s personalized data store when permissible and the used digital content is deleted from the originating user’s personalized data store. When a digital object exceeds a threshold number of moves or downloads, the ability to move may be deemed impermissible and suspended or terminated. Additionally or alternatively, a collection of objects may be assembled from individual digital objects stored in the personalized data stores of different users, and moved to a user’s personalized data store.”

With patent in hand, the Seattle company is emerging as an early winner in this race, and, buoyed by its enormous bandwidth and audience, is poised to lead the way in the next phase of digital distribution. Of course, said company has been experimenting with lending ideas for a while now, but owning a broad patent that could potentially determine how digital products are reused gives it an advantage over competing businesses.

The patent, which was originally filed in 2009, also describes how the Seattle company or any other copyright holder can set limits on the number of times content is transferred:

“The object move threshold (OMT) may limit the number of transfers of a used digital object to other personalized data stores when the used digital object has been moved more than a threshold number of times, thereby helping to maintain the scarcity of the digital object in the marketplace.”

This is an interesting development book publishers need to watch closely, as it most likely will have a huge impact on how ebooks are sold and circulated over the coming years.